When a Perfectly Competitive, Well-Functioning Market Is in Equilibrium

question 117

Multiple Choice

When a perfectly competitive, well-functioning market is in equilibrium:

• A) consumer surplus is minimized.
• B) producer surplus is minimized.
• C) total surplus is maximized.
• D) total surplus is zero.

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Definitions:

Internal Rate

Typically refers to the internal rate of return (IRR), a metric used in capital budgeting to estimate the profitability of potential investments.

Net Present Value

A calculation that determines the present value of future cash flows minus initial investment; it's used to assess the profitability of an investment.

Required Rate

Often referred to the required rate of return, it is the minimum expected rate of return on an investment deemed acceptable to an investor.

Payback Period

The duration of time it takes for an investment to generate an amount of income or cash flow equal to the cost of the investment.